Expats in China confused by social payments

A new law in China has been said to have left expats in a state of confusion.

A recently passed legislation that just came into effect on October 15, requires expatriates in China to pay an amount of their wages to the Chinese government for social insurance. Companies that employ expatriates will also be required to pay the new tax.

However, confusion has arisen as many details regarding the payments have yet to be cleared up. The thousands of people expecting to be affected by the payment are still unaware how and when the payments are to be made.

Usual custom in China sees implementation rules released as soon as a new legislation is introduced, however this time the rules may not appear until the end of November, leaving expats in the dark as to how their budgets will be affected.

The level of payment has been set tough, individual expats will pay around 11 percent of their wages and companies will have to pay 33 percent. In exchange for this perks such as medical insurance and unemployment benefit will be supplied.

There are also more sources of confusion though, as the payments are thought to differ in different regions. For instance employers in Shanghai will pay at a rate of 37 percent while Beijing employers will pay at 33 percent.

A British expatriate in China voiced his feelings to The Telegraph: “There is real confusion among employers who want to budget for 2012 but are unable to because they’re not sure what costs they are liable for. Many are facing a significant increase in overheads. Employers are unlikely to give their foreign workers a pay rise as they have to pay upwards of 30 per cent extra towards their social insurance. And the employee is going to be out of pocket as they have their own contributions to make”.